accelerated drawdown - " regulatory risk"

gadgetmind

atush wrote: »

Might be just to explain all the options available (kinda like here really) w/o actually giving any advice or being regulated for compensation?

That's exactly what's been floated but this is a major part of the consultation.

zagfles

atush wrote: »

We aren't really sure how the 'free face to face' thing will go.

Might be just to explain all the options available (kinda like here really) w/o actually giving any advice or being regulated for compensation?

But as said above and elsewhere, Barclays just had a complaint upheld when they had to pay compensation where they had not advised anything but instead was DIY and the person involved lost money by themselves.

Then the govt needs to sort the regulator out. What next, will people be able to sue if they withdraw from a current account and put the money on the favourite in the 2.30 at Kempton Park?

bigadaj

zagfles wrote: »

Then the govt needs to sort the regulator out. What next, will people be able to sue if they withdraw from a current account and put the money on the favourite in the 2.30 at Kempton Park?

Well just look what happened a few weeks ago with hsbc restricting large withdrawals from bank accounts.

bmm78

For perspective, go to http://www.ombudsman-decisions.org.uk/ and search for cases involving annuities.

The majority of advised cases with this search term will actually be income drawdown cases where the complaint is that the adviser should have recommended an annuity (and are often upheld).

Consider the disparity between numbers of advised annuity cases and advised drawdown cases (I don't have the figures at hand, but there is a massive difference), and this gives an idea of the relative risks to advisers of recommending drawdown as opposed to recommending annuities.

bmm78

zagfles wrote: »

Then the govt needs to sort the regulator out.

The FSA was given statutory powers by FSMA 2000, and operates independently of the government.

I don't know the ins and outs of how answerable they are to government in practice, but in theory it is upto the FCA how they regulate the areas they have statutory powers over.

zagfles

bmm78 wrote: »

For perspective, go to http://www.ombudsman-decisions.org.uk/ and search for cases involving annuities.

The majority of advised cases with this search term will actually be income drawdown cases where the complaint is that the adviser should have recommended an annuity (and are often upheld).

Consider the disparity between numbers of advised annuity cases and advised drawdown cases (I don't have the figures at hand, but there is a massive difference), and this gives an idea of the relative risks to advisers of recommending drawdown as opposed to recommending annuities.

That was my point. Surely to play safe the advisor would recommend an annuity. The punter could then ignore that advice and blow the lot on a Lamborghini, and have no comeback because he went against advice.

dunstonh

I don't know the ins and outs of how answerable they are to government in practice, but in theory it is upto the FCA how they regulate the areas they have statutory powers over.

The FSA went against the Govt a number of times. It was accused on a few occasions of sticking its fingers up at the Govt.

That was my point. Surely to play safe the advisor would recommend an annuity. The punter could then ignore that advice and blow the lot on a Lamborghini, and have no comeback because he went against advice.

Unfortunately, facilitating a transaction that you believe to be wrong can leave you culpable for it. There are areas where you may put a client down as insistent but there are also higher risk areas (i.e. where there are likely to be complaints) where firms will not transact on execution only or insistent client basis.

Whilst consumer protection is a good thing, it does get rather silly at times. And the consumer is just as greedy as many would accuse financial companies of being. Cold call someone saying they could get compensation and many are happy to put in a fraudulent/try-it-on complaint telling a bunch of lies just hoping that one may stick. This is a claims company wet dream They can cold call people and ask them if they have an annuity with their pension. if yes, they can put in a mis-sale complaint stating they were better with alternatives. If no, they can put in a mis-sale complaint saying that annuity was better given its security.

gadgetmind

dunstonh wrote: »

there are also higher risk areas (i.e. where there are likely to be complaints) where firms will not transact on execution only or insistent client basis.

So what does the client do in these circumstances?

zagfles

gadgetmind wrote: »

So what does the client do in these circumstances?

Presumably transfer to a company that will do as he wants?

bmm78

gadgetmind wrote: »

So what does the client do in these circumstances?

What often happens is that they eventually find some sap willing to take the risk.

There are a lot of firms that don't have a great awareness of the regulatory pitfalls, and proceed on the basis that if the client wants to do it there will be no comeback.